From Web 2.0 To E-Discovery 2.0

If there’s one idea that has captivated Silicon Valley in the past 3 years, it is Web 2.0. People may debate its meaning and definition, but the gist of it is clear: a handful of powerful forces have coalesced to make the internet of today fundamentally different to what it was 5 years ago. Opinions vary on which of these forces is most important: the growth of broadband to the home; open source, ajax and other technologies which lower the cost and increase the functionality of web applications; the power of community in a world where more people are on the web. Whichever you choose, there is no doubt that collectively these forces have had a huge impact, powering the growth of now-household names such as Google, MySpace, and YouTube.

I believe that an analogous set of changes is transforming the way companies do e-discovery. Ten years ago, e-discovery was an after-thought – a necessary, but incidental, part of corporate legal expenses. Today, it is a huge line-item in the legal budget, a headache for corporate IT, and the foundation upon which many cases are built.

E-discovery 1.0 was an ad hoc activity; e-discovery 2.0 is a core business process. E-discovery 1.0 was barely noticed; e-discovery 2.0 is driving the news cycle, affecting everyone from Intel to the US Attorney General. In the legal world, e-discovery 2.0 has had every bit as big an impact on enterprises as Web 2.0 has had on the dating lives of teenagers.

What happened? A series of fundamental changes have made e-discovery far more important, expensive, and complex than it was in the 1990s. Chief among these changes are:

1. Email, Not Voicemail: In the past 10 years, companies have switched from voicemail to email as the primary way they communicate. This has created a written record where none previously existed. Just as oral histories eventually die out, every voicemail eventually gets deleted; but emails and the written word live forever. Whatsmore, the convenience and time-efficiency of email makes it addictive, with the result that every meaningful conversation is captured, time-stamped, and attached to a person’s name. Given that many legal cases turn on intent, and proving who knew what when, this makes email a virtual treasure trove for anyone building a case.

2. Electronic Files, Not Paper: Electronic files are fundamentally different to paper documents: they reproduce like rabbits and are far cheaper to store. For example, one laptop is the equivalent of 2,000 boxes of paper; one server corresponds to 8,000-40,000 boxes of paper. The number of servers and laptops holding vast quantities of email is only increasing as the cost of hard disk storage falls, down from $2.04 per GB in 2004 to $0.77 per GB in 2006. Net net: going electronic has vastly increased the amount of data that must be analyzed as part of the discovery process.

3. Sooner, Not Later: Recent changes to the FRCP guidelines have moved e-discovery up in the process, forcing companies to have an e-discovery plan within 99 days of a suit being filed. Since disputes rarely settle that quickly, that means enterprises must now incur the expense of e-discovery on every case, not just the small number that actually make it to court. The result is a massive increase in e-discovery expenses and workload.

Anecdotal evidence of e-discovery 2.0 is everywhere. A few years back, no one would have guessed that every major analyst firm would have people dedicated to tracking e-discovery. Nor would you have expected to find a litigation support manager at every major enterprise.

So what exactly is e-discovery 2.0? Well, I will talk about that in a future post.

eDiscovery In The Blogosphere

It has now been over a month since I started blogging about Email Intelligence and eDiscovery, and perhaps the most pleasant surprise has been to find that I am not alone. As the chart below shows, there has been an explosion of activity around eDiscovery in the blogosphere since the FRCP Rule changes on December 1, 2006, with the happy result that today there are several voices which are well worth listening to.

To assist you in your travels, I offer a brief (and by no means comprehensive) guide to the blogs which have caught my eye. In general, they fall into 3 categories:

1. Messaging Mavens: For an entertaining look at email in the news, I would suggest Roger Matus’ Death by Email, which has everything from videos to colorful commentary. In a similar vein, Chris Foreman’s Messaging Mogul offers an interesting perspective on relevant technologies, in a way that is refreshingly free of the usual mind-numbing marketing-speak.

2. Legal Eagles: There are many lawyers who blog, often covering arcane topics or issues particular to a specific industry. But the one general, business-oriented legal blog that I would recommend is Andrew Cohen’s blog, which makes a range of complicated legal topics accessible to the general reader.

3. Article Clippers: Finally, there are the folks who helpfully collect interesting articles from around the web into a single place, so you can get a filtered view of the latest eDiscovery stories. Foremost among these is Jeff Fehrman and Bob Krantz’s edd blog online which focuses on eDiscovery and forensics.

I do not pretend to have anything close to a complete list. So if there are others worthy of a mention, please add them as a comment so that I can update my list.

Go Ahead, Sue Me!

It is a truism to say that it is easier to dispense advice than to follow it, and with good reason. How many venture capital firms practice the financial discipline they preach to their portfolio companies? How many management consulting companies employ the innovative management theories they advocate to their clients? And how many technology companies actually leverage leading-edge technology to solve their own business problems?

The answer, at least based on my experience, is “not very many”. For example, if you look at Silicon Valley’s leading technology companies, the vast majority do not have an e-discovery solution in place. Yes, there are some exceptions but for the most part, when it comes to e-discovery, the likes of eBay, Google, Yahoo, and (until recently) Intel have preferred to muddle through with manual, error-prone, expensive processes.

The justifications are typically the same. Some technology companies argue that they don’t need a legal discovery solution because theirs is not a litigious industry; others say they delete everything off their Exchange servers within three weeks and so don’t have any email to discover; all agree that things like email and document retention policies are needlessly bureaucratic.

The danger of this “we- don’t- need- car- insurance- because- we- will- never- have- an- accident” approach has been brutally exposed in the past few weeks by the painful experience of Intel. In case you missed the press coverage: AMD sued Intel for anti-trust violations. Like any company on the receiving end of a subpoena, Intel was obliged to provide opposing counsel with all email and documents relevant to the case.

If Intel had an e-discovery solution, that would have been a straightforward process. Intel’s IT group would simply identify a group of messages by date range, person, and perhaps keyword within their larger email archive. The legal group would then use an analysis product to cull down the messages to only those relevant to the case. The whole thing would take a few days. But that’s not what happened. Since Intel did not have an e-discovery solution, the company had no simple way to preserve and analyze the relevant data. Intel’s legal department was obliged to inform over a thousand employees that they could no longer delete data at will. Somewhere along the line, the message did not get through and employees kept on deleting. As a result, Intel was forced to go back to the judge with the proverbial “the dog ate my homework” defense, while AMD cried foul.

How much this costs Intel is yet to be determined. But my guess is that they will end up spending more on lawyers to fix the mess than they would have spent on an e-discovery solution that would have avoided the problem to begin with.

While I have given up on venture capitalists and management consultants, I remain optimistic that the technology industry will practice what it preaches and leverage technology to solve its own business problems in e-discovery. As Intel discovered, it is not enough to have smart lawyers on staff. You also need to equip them with an e-discovery solution that allows them to preserve and analyze information relevant to the case.

To do otherwise is an open invitation to your competitors to sue you. Just ask Larry Ellison – or better yet, SAP.